US Treasury Secretary Scott Bessent tapping the $1 trillion Treasury General Account, as just announced, to fund bond buybacks is a major red flag for investors, warns the CEO of one of the world’s largest independent financial advisory organisations. Nigel Green of deVere Group’s comments come as the US national debt punches through $40 trillion, arriving roughly two years ahead of official government forecasts, and the Treasury doubles the size of its bond buyback programme in an attempt to steady a market where 30 year yields had climbed to levels not seen since 2007. He says: “When a government has to step into the market and start buying back its own debt, it tells you the usual buyers didn’t show up in the volume Washington needed, and officials had to find another lever to pull.
It smooths the surface without touching the pressure building underneath it. Yields dropped sharply within minutes of the announcement landing. The first move was reflex.
The second move, the following day, was the market doing its arithmetic. That is not a borrower firmly in control of its financing. Investors should be looking well beyond their biases, toward equities, alternative assets and currencies that are not tethered to a single sovereign balance sheet under this kind of strain.” Gold and other assets that hold up well against inflation could deserve a fresh look too.
When a government is signalling, however indirectly, that it needs to manage demand for its own bonds, that is precisely the environment in which real assets tend to outperform paper promises. Nigel Green concludes: “The clearest message from this week appears to be that Washington is buying time, not fixing the problem. It does not cost much, but worth your attention.
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